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The move away from cheques accelerates

The rate of decline in the use of cheques is increasing with a record drop of over 25% reached for the period April 2018 to April 2019.

Data published by the RBA shows that cheque volumes fell from around 85 million in the year to April 2018 to under 63 million in the year to April 2019.

The dollar-value is also falling at a record rate: the April 2018 to April 2019 decline was 33% or $350 billion, dropping to $709 billion over the period.

This consumer-led move away from using cheques is nothing new: since 2002 cheque use has fallen by just under 90%. However, the recent increased rate of decline might be due, at least in part, to an industry initiative led by AusPayNet. This involved industry participants each developing their own ways to promote customer awareness of the convenience, efficiency and security benefits of digital alternatives to cheques. The goal is to prepare consumers for a world without cheques, and to ensure that cheque users are not left stranded. The RBA’s data suggests that these steps may have had an impact on cheque use.

To further pave the way towards ensuring that consumers have viable alternatives to cheques as cheque use declines, AusPayNet next intends to seek changes to legislation, and other guidelines and rules that prescribe the use of cheques. We are undertaking to advocate for payment method neutrality in the law, and in other industry bodies’ rules and guidelines, where reference to payments is made.

There are other factors likely to further reduce the use of cheques. One is legislation coming into effect requiring all property settlement transactions to be conducted electronically. Information provided on the PEXA (Property Exchange Australia) website states “On 1 July 2019 all mainstream conveyancing transactions will transition online in New South Wales.” The same will also apply in Victoria. Another is the increasing use of the NPP (New Payments Platform). Initiatives by NPP Australia such as e-invoicing, expected in the not-too-distant future, will help provide the functionality needed to ensure that digital alternatives are available for the current users of cheques.

Industries traditionally reliant upon cheques, like charities, are realising that they need to embrace modern payment methods if they are to enable donors to make payments. Cancer Council CEO, Sanchia Aranda, has recently said on the topic of digital payments, “we want to be able to use all the technologies available and be a modern charity. There’s no doubt that charities need to stay ahead of the technology and make sure it is embedded into the way that we do fundraising.”

In closing, it is worth recalling the words of Philip Lowe, RBA Governor, given in his address to the Australian Payment Summit in December 2018:

“It will be appropriate at some point to wind up the cheque system, given the high fixed costs involved in operating the system. We have not reached that point yet, but it may not be too far away. Before we do, it is important that alternative payment methods are available. Progress has been made on this front, but more is required.”

If businesses and consumers continue to turn away from cheques at the current rate the end foreseen by Philip Lowe could be sooner rather than later.